President Trump’s recent Executive Order on reducing regulation directed agencies to identify two existing regulations to repeal when issuing a new regulation, and to offset all incremental costs of new regulations. We released a statement on the Order, which we believe promotes a deeply flawed and irrational approach to regulation. Since the Reagan administration, executive orders on regulatory review have consistently focused on “maximizing the aggregate net benefits to society.” Because these orders have long required agencies—to the extent permitted by statute—to issue regulations only if benefits justify the costs, most current rules were net beneficial when they were adopted and protect the health and safety of the American public. Thus, the Order, by directing agencies to repeal regulations without considering their benefits, breaks from prior bipartisan precedent and advances the interests of regulated entities over the health and safety of Americans.
On February 2, 2017, the Office of Information and Regulatory Affairs (OIRA) released interim guidance on how it plans to implement the Executive Order, and we submitted comments on the guidance.
Within the framework of the Order, OIRA should continue to adhere to long-established principles for rational rulemaking. OIRA should facilitate implementation of the Order in a way that does not overly burden agencies’ abilities to carry out statutory obligations and follow judicial orders. OIRA should focus the Order primarily on “economically significant” actions to promote workability while achieving the Order’s objectives. At the same time, OIRA should clarify that repeals or modifications to non-significant regulations can generate cost offsets.
In implementing the Order, agencies should prioritize the repeal or modification of outdated, ineffective, and unnecessary regulations. OIRA should encourage agencies to develop plans for retrospective review in order to calculate the actual costs of regulation and identify candidates for cost-saving modifications. For future years, OIRA should set the total allowable regulatory budget by reference to net costs—that is, costs net of reasonable estimates of regulatory benefits, including difficult-to-quantify benefits.
Bipartisan, consensus recommendations from former OIRA administrators show support for cost-benefit analysis as the driving force in regulatory review. Along with our comments, we submitted our recent report, which offers recommendations on regulatory review from a bipartisan group of former OIRA administrators.